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WHAT IS THE MEANS TEST?

If your average monthly income exceeds the median income for a family your size in your State, then you have to pass the Means Test to be eligible to file a Chapter 7 bankruptcy.

But if your debts are not primarily consumer debt, then you don’t have to take and pass the Means Test.

The Means Test seeks to determine if you have sufficient “disposable income” to fund a Chapter 13 bankruptcy plan. If the Means Test reveals that you have more than certain amount left over at the end of the month, you will not be eligible to file Chapter 7 (unless it is established that special circumstances exist).

Note: The Means Test also has ramifications for Chapter 13 filers as well.

DISCLAIMER

Seek professional legal advice regarding the applicability and calculations pertaining to the Median Income and Means Tests related to bankruptcy.  The issues and laws related to this article (and bankruptcy in general) can be complex.  This above is a generalized explanation.   Further Disclaimer

 Author: Attorney Matthew B. Tozer
 
Copyright 2011

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